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Test your basic knowledge |
AP Microeconomics
Start Test
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Subjects
:
economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately
Monopolistic competition long-run equilibrium
Perfectly inelastic
Comparative Advantage
Complementary Goods
2. The most desirable alternative given up as the result of a decision
Total Fixed Costs (TFC)
Production function
Negative externality
Opportunity Cost
3. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital
Marginal tax rate
Consumer surplus
Fixed inputs
Market power
4. Ed = 8 - infinite change in demand to price change
Incidence of Tax
Perfectly elastic
Oligopoly
Price inelastic demand
5. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.
Monopolistic competition long-run equilibrium
Spillover benefits
Substitution Effect
Constant cost industry
6. The marginal utility from consumption of more and more of that item falls over time
Law of Diminishing Marginal Utility
Non-collusive oligopoly
Accounting Profit
Cross-Price Elasticity of Demand
7. Product demand - productivity - prices of other resources - and complementary resources
Relative Prices
Price Elasticity of Supply
Determinants of Labor Demand
Surplus
8. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good
Positive externality
Least-Cost Rule
Private goods
Market power
9. Ed = 0 - no response to price change
Production function
Dead Weight Loss
Perfectly inelastic
Cross-Price Elasticity of Demand
10. Exists if a producer can produce a good at lower opportunity cost than all other producers
Decreasing Cost industry
Private goods
Perfectly elastic
Comparative Advantage
11. The output where ATC is minimized and economic profit is zero
Shutdown Point
Break-even Point
Four-firm concentration ratio
Income Elasticity
12. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Collusive oligopoly
Short run
Law of Supply
Average Total Cost (ATC)
13. Ed = 1
Average Product of Labor (APL)
Market power
Constant Returns to Scale
Unit elastic demand
14. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Shutdown Point
Inferior Goods
Market Economy (Capitalism)
Total Product of Labor (TPL)
15. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources
Profit Maximizing Resource Employment
Normal Profit
Producer surplus
Determinants of Demand
16. The total quantity - or total output of a good produced at each quantity of labor employed
Scarcity
Cartel
Positive externality
Total Product of Labor (TPL)
17. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Determinants of Demand
Short run
Price elasticity
Total Revenue
18. Costs that change with the level of output. If output is zero - so are TVCs.
Four-firm concentration ratio
Total variable costs (TVC)
Utility Maximizing Rule
Free-Rider Problem
19. Has opposite effect of an excise tax - as it lowers the marginal cost of production - forcing the supply curve down
Profit Maximizing Rule
Market Economy (Capitalism)
Subsidy
Productive Efficiency
20. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Determinants of Supply
Total Fixed Costs (TFC)
Short run
Economic Profit
21. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Income Effect
Explicit costs
Law of Demand
Law of Supply
22. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF
Public goods
Allocative Efficiency
Marginal Analysis
Market Equilibrium
23. The ability to set the price above the perfectly competitive level
Perfectly competitive long-run equilibrium
Market power
Profit Maximizing Resource Employment
Implicit costs
24. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary
Productive Efficiency
Cross-Price Elasticity of Demand
Normal Profit
Incidence of Tax
25. The imbalance between limited productive resources and unlimited human wants
Scarcity
Producer surplus
Normal Goods
Constant cost industry
26. The sum of consumer surplus and producer surplus
Determinants of elasticity
Total Welfare
Four-firm concentration ratio
Diseconomies of Scale
27. A good for which higher income increases demand
Productive Efficiency
Average Total Cost (ATC)
Price elasticity
Normal Goods
28. The mechanism for combining production resources - with existing technology - into finished goods and services
Opportunity Cost
Spillover costs
Production function
Private goods
29. The change in quantity demanded resulting from a change in the price of one good relative to other goods
Substitution Effect
Marginal Benefit (MB)
Perfectly elastic
Marginal Cost (MC)
30. Ei > 1
Determinants of Supply
Luxury
Determinants of elasticity
Perfectly inelastic
31. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Diseconomies of Scale
Constant cost industry
Positive externality
Total variable costs (TVC)
32. When firms focus their resources on production of goods for which they have comparative advantage
Specialization
Decreasing Cost industry
Total Fixed Costs (TFC)
Price Elasticity of Supply
33. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit
Marginal Cost (MC)
Luxury
Price Ceiling
Perfect competition
34. Models where firms agree to mutually improve their situation
Determinants of Demand
Collusive oligopoly
Marginal Product of Labor (MPL)
Consumer surplus
35. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.
Determinants of Labor Demand
Comparative Advantage
Marginal Revenue Product (MRP)
Average Total Cost (ATC)
36. Ed = (%dQd)/(%dP). Ignore negative sign
Price elasticity
Economics
Variable inputs
Substitution Effect
37. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Break-even Point
Law of Increasing Costs
Dead Weight Loss
Average Variable Cost (AVC)
38. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Oligopoly
Economic Growth
Spillover benefits
Total Fixed Costs (TFC)
39. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price
Perfectly elastic
Perfectly inelastic
Determinants of elasticity
Producer surplus
40. The practice of selling essentially the same good to different groups of consumers at different prices
Surplus
Law of Diminishing Marginal Utility
Economics
Price discrimination
41. The difference between total revenue and total explicit costs
Collusive oligopoly
Price elasticity
Accounting Profit
Total variable costs (TVC)
42. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product
Marginal Product of Labor (MPL)
Spillover benefits
Necessity
Least-Cost Rule
43. 0 < Ei < 1
Necessity
Price elasticity
Surplus
Price Elasticity of Supply
44. Entry of new firms shifts the cost curves for all firms downward
Natural Monopoly
Monopolistic competition
Marginal tax rate
Decreasing Cost industry
45. Exists if a producer can produce more of a good than all other producers
Excise Tax
Absolute Advantage
Price inelastic demand
Marginal Resource Cost (MRC)
46. A firm that has market power in the factor market (a wage-setter)
Monopsonist
Complementary Goods
Productive Efficiency
Implicit costs
47. AVC = TVC/Q
Price discrimination
Economic Growth
Allocative Efficiency
Average Variable Cost (AVC)
48. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials
Variable inputs
Decreasing Cost industry
Monopoly
Economics
49. The additional cost incurred from the consumption of the next unit of a good or a service
Perfectly elastic
Marginal Cost (MC)
Collusive oligopoly
Marginal Resource Cost (MRC)
50. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good
Law of Supply
Negative externality
Total Revenue
Monopolistic competition